Canmore’s vacancy tax bylaw deemed valid by Alberta judge

Cyclists ride through downtown Canmore, Alta., on April 24, 2023. THE CANADIAN PRESS/Jeff McIntosh

A bylaw meant to change the tax rate for residential properties in the town of Canmore is valid, but it won’t come into effect until at least 2026, an Alberta judge ruled this week.

The updates to the Division of Class 1 Property Bylaw added a new primary residential subclass, which will allow council to tax this class of property at a different rate than other classes.

Vacancy taxes are technically not allowed in Alberta, but subclasses can be taxed with different rates under the Municipal Government Act (MGA).

In Canmore’s case, residential properties were divided into five sub-classes: residential, tourist home, primary residential, residential vacant serviced land and residential vacant unserviced land.

By doing this, the town could set different tax rates for each of the sub-classes, with the intention of taxing primary residential properties at a lower rate “than some or all of the other sub-classes.”

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In the Alberta Court of King’s Bench, a group of individuals along with two property management companies said Canmore’s bylaw was invalid and should be quashed.

“The applicants say Canmore unreasonably exceeded its authority in passing the bylaw,” said Justice C.D. Simard in the decision released Wednesday.

Simard said the applicants claimed the bylaw was unreasonable because it fell outside the provisions of the MGA as well as the overriding assessment and taxation purpose.

They also claimed it was “void for vagueness” and “improperly delegates responsibilities of the municipal assessor to Canmore’s CAO.”

The town disputed those claims, saying the province gave it “broad authority” to divide properties into sub-classes and it “is within the express provisions of the MGA.”

Simard ruled that Canmore’s bylaw was valid and the town “has not strayed outside the purpose and object of the MGA.”

“All assessments of properties in the new sub-classes will still be conducted by the assessor, following the mandatory and proscribed rules in Part 9, Division 1. Those assessments will therefore still be ‘current, correct, fair and equitable,’” Simard wrote.

“In creating residential sub-classes by distinguishing on a basis already expressly used in the MGA, the uses of property, Canmore has reasonably established and maintained in the bylaw a property assessment system that ‘fairly and equitably distributes taxes, and promotes transparency, predictability and stability for municipalities and taxpayers.’”

The bylaw was passed on Aug. 21, 2024, but Simard said that didn’t leave property owners with enough time to satisfy the residency requirements by Dec. 31.

“I conclude that the consequences for the owners who were retrospectively prevented from satisfying the residency requirements will be prejudicial,” Simard said.

“There is ample evidence in the Record from which I have inferred that Canmore intends to set a higher tax rate in 2025 for properties that do not satisfy the residency requirements, and therefore have the residential sub-class assigned to them.”

However, Simard said this meant Canmore would only be able to apply and enforce the bylaw for the 2026 and subsequent tax years.

Canmore happy with judge’s decision

The town called the judgement “a big win” for the community, validating its authority to support the needs of its community.

“While encouraging primary residency, the Livability Tax Program will directly fund the creation of non-market homes. We look forward to this program moving forward with full legal authority behind us,” said Mayor Sean Krausert.

The town says it will review the ruling to see what it means for implementation of the bylaw.

$10M budget shortfall

An advocacy group fighting for affordable housing in the mountain community says the court decision will sap more than $10 million from the town’s budget.

Fair Future Canmore said the town’s “reckless drive to punish secondary homeowners” cost the community 21.8 per cent of its 2025 tax revenue.

“Fair Future Canmore has consistently warned for over a year that the vacancy tax represented an unjust burden on select property owners while failing to address housing affordability through collaborative solutions,” said Stephen Ross, one of the appellants that appealed the vacancy tax, in a statement.

“Unfortunately, town council pushed forward with this divisive measure and now finds itself without resources to address housing in 2025.”

The group wants to see the town scrap its vacancy tax and develop a housing strategy that would include residents, all homeowners, developers as well as the provincial and federal governments.

With files from Teri Fikowski